Were Hedge Funds Right About MSA Safety Incorporated (MSA)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider MSA Safety Incorporated (NYSE:MSA) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is MSA Safety Incorporated (NYSE:MSA) going to take off soon? Hedge funds were betting on the stock. The number of long hedge fund positions increased by 4 recently. MSA Safety Incorporated (NYSE:MSA) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 26. Our calculations also showed that MSA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 13 hedge funds in our database with MSA positions at the end of the fourth quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bruce Kovner of Caxton Associates LP

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s view the latest hedge fund action encompassing MSA Safety Incorporated (NYSE:MSA).

Do Hedge Funds Think MSA Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MSA over the last 23 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

The largest stake in MSA Safety Incorporated (NYSE:MSA) was held by Impax Asset Management, which reported holding $5.3 million worth of stock at the end of December. It was followed by D E Shaw with a $5 million position. Other investors bullish on the company included Citadel Investment Group, PDT Partners, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to MSA Safety Incorporated (NYSE:MSA), around 0.2% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to MSA.

Now, key hedge funds have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, created the most valuable position in MSA Safety Incorporated (NYSE:MSA). ExodusPoint Capital had $1.5 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Bruce Kovner’s Caxton Associates LP, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as MSA Safety Incorporated (NYSE:MSA) but similarly valued. We will take a look at Medpace Holdings, Inc. (NASDAQ:MEDP), Integra Lifesciences Holdings Corp (NASDAQ:IART), Agora, Inc. (NASDAQ:API), Primerica, Inc. (NYSE:PRI), HollyFrontier Corporation (NYSE:HFC), Foot Locker, Inc. (NYSE:FL), and Kodiak Sciences Inc (NASDAQ:KOD). This group of stocks’ market values are similar to MSA’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $557 million. That figure was $30 million in MSA’s case. Foot Locker, Inc. (NYSE:FL) is the most popular stock in this table. On the other hand Integra Lifesciences Holdings Corp (NASDAQ:IART) is the least popular one with only 13 bullish hedge fund positions. MSA Safety Incorporated (NYSE:MSA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MSA is 41.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately MSA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MSA investors were disappointed as the stock returned 8.8% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.